Political Economy Explanation Research Articles

Multilateral financial flows and state–business relations in Morocco

ABSTRACT Political economy explanations of regime resilience often look at domestic support bases and patronage systems. Foreign aid to the state is seen as a direct form of propping up regimes. This article attempts to track the flow of foreign assistance to one part of the domestic support base of a regime, namely the economic elite, thereby making a connection between domestic explanations and foreign support explanations of regime resilience. The core argument of this article is that multilateral financial flows from Western dominated institutions may preserve regimes in the Middle East and North Africa. Multilateral flows from the World Bank Group, the European Investment Bank, and the European Bank for Reconstruction and Development went to regime insiders and thus potentially strengthened existing economic elites during the time in which the former Islamist opposition party led a coalition government. I draw on the linkage dimension of Levitsky and Way’s model to show the importance of specifying the nature and destination of multilateral financial ties with Morocco’s private sector. This contribution helps us link the international dimension to the domestic political economy. It thus potentially adds to our understanding of monarchical regime resilience post-Arab Spring by highlighting how multilateral financial institutions support an important part of the economic elite.

Neoliberalism, institutional change and the new culture of the university professoriate: the Spanish case

ABSTRACT Neoliberalism has pervaded almost everywhere in the world, bringing about major changes in institutional frameworks and social relations. Science and university research have not escaped the effects of the neoliberal conception of university knowledge as a commodity and of Higher Education as a factor of economic growth. This research offers a provisional assessment of the effects of the profound institutional change produced in the Spanish university sphere instigated European and national directives. As will be seen, the implementation of the operational criteria of evaluation is shaping a new culture of university teaching staff. This paper ties together a Institutionnal Political Economy explanation of the transformation of Spanish academia with research evidence of the outcomes of a neoliberal regime, honing in or activities resembling or constituting malpractice, and complicity of staff in their governance, alongside the more commonly discussed issues of workplace stress, overwork, and mental health issues. This research analyses the discursive devices and strategies used for the construction of the new neoliberal subjectivity, by means of an exhaustive review of the literature and empirical studies carried out in Spain. Next, the institutional effects of the disproportionate use of metrics are presented. Thirdly, the socialisation processes of Spanish academics and their adaptation to evaluation methods are described. The text ends with a brief conclusion and a series of proposals aimed at configuring another way of generating knowledge in a model designed more for development than for economic growth.

The political economy explanation of the logic of China’s “two miracles”

Purpose During the Communist Party of China's endeavors over the past century, China has created “two miracles,” namely, large-scale and rapid economic development and long-term social stability.Design/methodology/approach The causes for China's achieving the “two miracles” lie in the adherence to the Party's leadership as the political guarantee, the scientific theoretical guidance as the ideological guarantee, the socialist system as well as the national governance system as the institutional guarantee and giving full play of people's creativity under the Party's leadership as the driving force guarantee.FindingsFrom a political economy point of view, the theoretical logic behind the creation of the “two miracles” is that the combination of the state capacity and the scaling up of markets under the Party's leadership contributes to the rapid economic development and further the long-term social stability based on the financial foundation laid by rapid economic development. The historical experience of the “Two Miracles” can be summed up as the cultivation of state capacity under the leadership of the Party, the synergy and complementarity between the central government and local governments, the combination of development planning and market mechanisms, and the coordination of selective, functional and inclusive industrial policies.Originality/valueIt is necessary to judge future development trends from a medium and long-term development perspective, further promote the co-evolution of the state and the market, reshape the growth regime for high-quality development, fully tap the potential of domestic demand and create a “people-centered” economic development model so as to continue the “two miracles” and achieve a miracle of high-quality development in the second century.

Does natural resource hinder, taxation capacity and accountability? A case of selected oil abundant developing countries

This study aims to explore the mechanism that corroborates the political-economy explanation of the resource curse in oil rich developing countries. This mechanism elucidates that increasing resource rents provides higher incentives for leaders to remain in power, through a deliberate refusal to improve taxation capacity, which would, in turn, reduce the tax burden on its citizens to reduce their demand for accountability. Using a panel data set for 25 oil producing developing countries for the period 1996–2011, the study demonstrated that oil abundant developing countries lack adequate taxation capacity which influences fiscal contract through taxation of the citizens and minimises the scrutiny of government and the demand for accountability. In turn, the economy is plagued by inadequate provision of public goods and a limited means to raise revenue to finance government expenditure. The empirical analysis supports this mechanism. To this regard, it concludes that the presence of oil in the selected countries can undermine accountability.

The role of the state in the touristification of Lisbon

The explanation regarding the recent touristification of cities has significantly focused on the ability of platforms such as Airbnb to offer millions of tourist beds in areas that were not planned for tourism use. Exploring Lisbon, we offer instead a political economic explanation where touristification is the result of the active intervention of the neoliberal state. Lisbon moved from a phase of abandonment to be gentrified by tourism in a very short period. To explain this, we examine how the state absorbed the cost of redevelopment, thus ensuring that private capital could extract profits from rehabilitation, and allowed developers to build the most profitable product with no limitations, which to a great extent are short-term rentals, hotels, and luxury housing for transnational users. By examining how the central city has been re-invented to serve the needs of private capital, we develop a dialogue between this general process of gentrification and how it is experienced in Southern Europe as a wave of intense touristification. We contextualize this within the historical political economic process in which the European South has progressively become a space of vacation for transient populations who are presented as the new class to be served.

Stringency of environmental policy in China: When pollution drives bribery

This study provides a political economy explanation for the recently increased stringency of China's environmental policy. Specifically, we argue that prior to 2009, bribery from polluting firms was relatively successful in persuading local regulators to implement weak environmental policies. Since that time, pollution has reached a threshold that significantly changed regulators' objectives, leading them to refuse bribes, hence strengthening environmental policy. Thus, we built a theoretical general equilibrium model (with uncertainty about a pollution-induced catastrophe) in order to investigate the decision-making of local regulators. Using pollution and bribery data from China, we empirically confirmed the existence of a threshold for PM2.5 and calibrated our theoretical model. We showed that the current pollution level is higher than the optimal level of 9 μg/m 3 that a forward-looking regulator would target (with a 1.5% risk of facing a pollution catastrophe). This suggests that the current pro-environmental activities of Chinese firms have been triggered by the changing behaviors of local regulators. • The current more stringent environmental policy in China is attributed to less bribery. • The reduction in bribery in China is due to a stochastic pollution threshold. • The stochastic pollution threshold was reached in China between 2009 and 2016. • Forward-looking local regulators should choose a steady-state with low pollution. • China's severe pollution in the past is attributed to myopic local regulators.

Comparing Minimum Wage Policies in East Asia: Political Competition and Labor Incorporation

This article attempts to explain the evolution of minimum wage levels in three East Asian economies: Japan, South Korea, and Taiwan. A political-economic framework incorporating the levels of political competition and labor incorporation is suggested. With strong political competition and a lack of labor incorporation, South Korea exhibits the strongest minimum wage increase, followed by Taiwan with incorporated labor. Japan has the weakest minimum wage with uncompetitive politics and labor incorporation. The framework is supported by descriptive accounts of the three cases and supplemented by quantitative analysis. As a factor commonly viewed as less relevant for welfare development in the region, the impact of leftist governments is found to be conditional upon the level of political competition. This article contributes to the literature by providing a political-economic explanation of the minimum wage, as well as linking East Asia with the mainstream welfare state literature.

Destructive Innovation to the Unsustainability of the Environment

This article explores the causes of environmental degradation and aims to explain the interconnection of state, capital, and masses as enhancing environmental degeneration. Innovation and production processes have progressed under the guise of economic gains, and entrepreneurs' efforts to produce new things, coupled with capitalistic mottos,added to the hazardous environmental pollution. My argument is backed up by the theory of tread mill production as a political-economic explanation of the causes of environmental degradation. This stance refers to the extensive capitalistic search of the state and masses as getting stuck on a "treadmill" where they have not improved economically, yet their pursuits for economic development lead them to damage the environment. Using the narrative of New York 2140, this study warns about the possible menace thwarted back by the environment. This study highlights how the innovation process under capitalistic goals leads to unnecessary over-consumption, which ultimately results in environmental unsustainability.

Inclusive globalization or old wine in a new bottle? China-led globalization in sub-Saharan Africa

ABSTRACT This article questions whether China’s economic initiatives lead to ‘inclusive globalization’ or tend to sustain the distributional inequalities of neoliberal globalization in the context of sub-Saharan Africa. It argues that many considerations, including China’s so-called ‘no strings attached’ policy and lending behaviour, unfavourable trade relations, concentration of Chinese investments in a few sectors, and limited technology and knowledge transfer, cast doubt on the realization of inclusive globalization. Even though economic relations with China may foster economic growth and provide short-term relief to the poor, which is also conditioned by the recipient countries’ degree of state capacity, it is questionable to what degree these relations lead to sustainable pro-poor development. No matter what the underlying political economy explanation is (China’s motivations and approach to globalization, weak state capacities in sub-Saharan Africa, structural impediments to development), it is misleading to conclude that China-driven economic globalization is inclusive.

The Political Economy of the EU Approach to the Rohingya Crisis in Myanmar

European institutions have repeatedly represented the EU as an actor that can use the attractiveness of its market to promote human rights internationally. From this perspective, EU trade sanctions represent a hard power tool to push the government of states accused of major human rights violations to abide by international law. In its reaction to the Rohingya crisis in 2018, despite the European Parliament’s call for the lifting of Myanmar’s trade preferences, the Council of the EU stated that it would rather tackle the problem by taking a “constructive approach” based on dialogue. We provide a political-economy explanation of this choice, making a plausible case that the political pressures from European importers and exporters, not to jeopardise trade relations with Myanmar, prevailed over the demands of European protectionist groups and NGOs advocating a tougher position. The firms interested in maintaining preferential trade relations with Myanmar were primarily motivated by a desire to avoid a disruption of trade and investment links within global value chains (GVCs) so that they could continue competing with Chinese enterprises.

Who governs? state versus jihadist political order in Somalia

Why has the Somali government failed to provide public order and essential services, while Al-Shabaab has had relatively more success in its governance objectives? To explain this variation in governance success, we offer a political economy explanation of wartime order-making based on the competing bargains that governing actors create to uphold their power. We identify two key political bargains in Somalia: (1) an elite deal, forged among members of the Somali Federal Government (SFG) and Federal Member States (FMS); and (2) a civilian deal, which Al-Shabaab directly establishes with the citizens under its control. Looking at these two deals, we examine how access to foreign support can affect a governing actor’s taxation impetus, and subsequently its commitment to governance. Our results reveal that not only can foreign support undermine the normal taxation-protection relationship between citizen and state, but it can also inadvertently provide jihadists with an opportunity to establish alternative forms of order.

Covid-19 Pandemic and Foreign Bank Performance in Asia-Pacific

The covid-19 pandemic affects all aspects of human life, including the economy. Investments, transactions, and other financial services got a surprising shock as the effects of the pandemic. However, as time goes by, the pandemic starts to re-normalize turning into a new normal. Even, some countries in the Asia Pacific commencing a new-normal life, like, China, South Korea, and Singapore. Despite the good news, it seems the grassroots is not fully recovered from the shock. Therefore we argue that the positive outlook may not give a lot of positive senses and confidence, hence skepticism in the economy persists, especially in economic growth, despite some aspects, such as international banks or financial institutions in Asia set an optimist target. Further, this paper would like to explain the Behavioral Political Economy perspective and the case of CIMB Group in Indonesia for capturing regional political economy explanation and analyzed the relation of grassroots condition and the target’s positivism post the pandemic, as Indonesia is the second-largest market in the Asia Pacific and CIMB is one of the prominent universal bank groups in ASEAN and beyond.

Multilateralism, Bilateralism and Institutional Choice: The Political Economy of Regime Complexes in International Trade Policy

AbstractThe global trading regime is characterized by the co‐existence of bilateral and multilateral politics. In this article, we offer a political economy explanation for this regime complex, by tracing public actors’ institutional choices back to political incentives for economic sectors and the firms active within them. First, we argue that product differentiation creates mixed motives on the part of firms, which in turn leads to a preference for the segmentation of markets, and thus bilateralism. Second, we contend that among these firms, multinational corporations (MNCs) are particularly well‐positioned to exert influence over policy decisions in multiple international fora, both bilateral and multilateral. This provides incentives for multinationals to push governments to create and sustain regime complexes in the form of nested regimes. We show how these expectations are largely born out in an empirical test for six different economic sectors.

The role of wages in the Eurozone

There are two main political economy explanations of the Eurocrisis. The labor market view regards cross-country differences in wage bargaining institutions as the root cause of the crisis. The finance view, instead, emphasizes cross-border financial flows and downplays labor market institutions. For the first time, we attempt to assess these two explanations jointly. We find that financial flows are better predictors of nominal wage growth than labor market institutions. At the same time, we show that wage moderation matters for bilateral export performance in the important case of Germany, but not for other countries. These results suggest that imposing wage moderation and labor market reforms onto the countries of the European periphery was unlikely to improve their plight. In contrast, stimulating wage growth in Germany might have contributed to rebalancing the Eurozone.

Rent creation, clientelism and the emergence of semi-democracies: the case of Hungary

ABSTRACT The paper offers a political-economic explanation of democratic backsliding based on rents and clientelism. Using a simple model, it is shown that incumbents in a dominant position may sacrifice short-term vote maximisation for long-term strategic advantages stemming from the stabilisation of their own supporting base. Weak democratic institutions may also allow them to bend the rules, leading ultimately to a new system: semi-democracy. The transformation of Hungary to a semi-democracy after 2010 fits very well to the results of the model, proving also that the consolidation of new democracies is a much longer project than it had been assumed before.

Responding to the commodity boom with varieties of resource nationalism: a political economy explanation for the different routes taken by Africa's new oil producers

The institutional responses of Africa's new producers to the early 21st century commodity boom differed both between and within countries over time. Despite making similarly sized discoveries in the mid-2000s, Ghana and Uganda took different routes, with Ghana oscillating between a neoliberal modality and a soft version of resource nationalism (depending on which party was in power), whilst Uganda adopted a more consistent and robust resource nationalist position. Current explanations for varieties of resource governance tend to focus on either institutions or ideas. We argue for an alternative theoretical perspective that locates the entwined role of both institutions and ideas within a deeper analysis of a country's ‘political settlement’. This offers a more compelling explanation for the varied responses to the commodity boom in sub-Saharan Africa, and suggests that different types of political settlements have had significant implications for how oil governance has progressed in different contexts.

Smoke with fire: Financial crises and the demand for parliamentary oversight in the European Union

The handling of the 2008 financial crisis has reinforced the conviction that the European Union (EU) is undemocratic and that member states are forced to delegate overwhelming power to a supranational technocracy. However, European countries have engaged with this alleged power drift differently, with only a few member states demanding more parliamentary scrutiny of EU institutions. This article develops a political economy explanation for why only some states have enforced mechanisms to monitor the EU more closely. Our theory focuses on the role of the crisis and the impact of fiscal autonomy in countries outside and inside currency arrangements such as the European Economic and Monetary Union (EMU). We argue that, in the aftermath of a severe economic shock, member states outside the EMU possess more monetary and fiscal resources to handle the crisis. These would then demand oversight of EU decision-making if their fiscal sustainability depends on the Union. By contrast, Eurozone states that need policy changes cannot address the crisis independently or initiate reforms to scrutinize the EU. Hence, we argue that during the heated moments of severe economic downturns, parliaments in Eurozone countries discuss supranational supervision rarely. As these legislatures have nevertheless to give in to the popular demand for EU control, they express support for more EU supervision in the infrequent times of debate. We provide evidence for our theory with a cross-national analysis of EU oversight institutions, and a new original dataset of parliamentary debates during the Eurozone crisis. Our findings highlight the political consequences that financial nosedives have across the diverse membership of a supranational organization.

What explains sub-national variation in maternal mortality rates within developing countries? A political economy explanation.

Available evidence on maternal mortality rates (MMR) reveals stark differences not only between but also sub-nationally within countries. However, the causes of sub-national variation in MMR remain under-researched and under-theorised. This is a serious problem given the widespread reliance on local authorities to deliver health services in developing countries, which means that sub-national efforts to curb MMR are critical. We propose a multi-level political economy analysis framework which, when applied in Uganda, usefully explained the sub-national differences. Drawing on process tracing and rigorous comparative case study analysis of two otherwise similar districts, this approach was able to identify certain political economy factors as being critical to shaping different levels of progress on MMR. The key variables that matter at district level are not necessarily the 'formal' factors identified in the literature, such as levels of democracy and citizens' power. Rather, the character of the local ruling coalition influences how they play out in practice. This analysis of local power relations needs to be located within a similar understanding of the political economy of health provisioning at a national level, which in many developing country contexts is itself profoundly shaped by international actors. Since the early 2000s, political developments have catalyzed a growing sense of vulnerability within Uganda's ruling coalition leading to political capture of the health ministry and undermining efforts to prioritise maternal health at the national level. With development agencies further undermining the emergence of a coherent centralized strategy, performance at the local level has become dependent on whether 'developmental coalitions' of political, bureaucratic and social players emerge to fill the vacuum. The paper concludes that the large variance in capacity and commitment to reduce maternal mortality within subnational levels of government has to be understood in relation to the local political settlement within which health service provision operates.

Why inequality persists in Africa

SUMMARY How to explain persistent inequality in Africa and its widespread consequences of uncertainty and social costs continues to be the focus of heated debate. In this debate piece, I argue that the contending orthodox, heterodox and political economy explanations are not satisfactory. Instead, stratification economics, centred on property and institutions, offers a more compelling elucidation of why stratification and inequality persist in Africa.

Work: What is Political Economy by Bruce Pietrykowski

Reviewed by: Work: What is Political Economy by Bruce Pietrykowski Daniel James Joseph Bruce Pietrykowski, Work: What is Political Economy (New York: Polity Books 2019) This review of Bruce Pietrykowski's very insightful Work took much longer than I had planned because work got [End Page 219] in the way. The first was that I moved across the Atlantic, far from my home in Toronto, for work. I had no alternatives, really. I was out of Employment Insurance following my postdoctoral fellowship at the University of Toronto and my savings were drying up. The Canadian academic job market had been a dead end for me. When I finally had my feet on the ground at my new job, the covid-19 pandemic struck and I suddenly found myself locked (along with everyone else) inside, far from most of my friends and family. I had a lot of work to do, under unprecedented conditions. While the lockdown kicked into full gear here in England I watched the stock market crash, the price of a barrel of oil drop to less than zero, and economists of all stripes warn of the worst recession since the Great Depression. This had me reflecting on why I was so far from home for work, and how what has pushed this system over the edge was the cessation of work for billions of people. With friends on Zoom, I started reading Marx's Capital again and started reading E.P. Thompson's The Making of the English Working Class. A few months into these dense tomes I returned to Pietrykowski's Work and found myself enjoying it immensely. Informed by recent reading I found myself nodding along with the clear lines drawn between classic examples of political economy and history and contemporary issues. In this way the book functions as Cliff Notes of sorts for the classics and gives interested readers a wealth of citations and material on contemporary debates. Key is that Work does not endeavour to offer ground-breaking new theoretical terrain, but instead situate the reader within the existing political economic literature. It begins with an introduction covering the origins of the field of political economy (in its Marxist, feminist, and post-Keynesian forms). There is a short history of the transition from feudal to capitalist modes of production. Here are also the first of what will be numerous break-out text boxes that deal with some disagreements and discussions within the field. For example, here they concern the status of animals as workers and how political economists have come to understand slavery contra wage labour. These text boxes quickly communicate that while Work is less didactic than many academic course textbooks, it's still written as an introduction for readers new to the field. The next chapter, "Inequality at Work: Skills, Wages and Productivity" builds on this core by starting with the problem of inequality and then working through a variety of apologia for, and criticisms of, inequality. I particularly enjoyed the discussion and criticism of human capital theory, something that I think about every time I enter a classroom filled with students who are told by politicians and universities that they are paying for valuable upskilling. Here Pietrykowski walks the reader through the arguments that neoclassical economists have made for decades about the unequal distribution of income in the economy as a function of skill acquisition. Pietrykowski then engages in a thorough critique showing how race, gender, and technology play an outsized role in determining wage inequality, while summarizing different political economic explanations of crisis and inequality. Chapter 3, "Gender at Work: Caring Labor" covers a considerable amount of material concerning feminist political economy, beginning with the foundational discussions and debates concerning "productive" and "unproductive" labour, and the gaps in Marxist political economy that sprang from this. From here the concept of social reproduction is introduced and the basics of global housework are discussed. The lack of bargaining [End Page 220] power in a non-waged home-bound relationship is stressed alongside varying ways in which gender is performed and understood, and exploited economically, in different cultures. There is a discussion of feminist political economy's focus on caring and...